The greenback was mixed against the majors, higher against the sterling and yen but softer versus the euro. Economic data released earlier in the session saw pending homes in February fall by 1.9%, more than double the expected 0.7% decline versus a flat reading from January.

The minutes from the Fed's March meeting revealed that the participants felt a prolonged severe economic downturn could not be ruled out, with the staff projection showing a "contraction in real GDP" in the first half of 2008 and slowly recovery in the second half. Fed Board members Fisher and Plosser dissented, favoring a less aggressive cut. Both were worried that inflation expectations could unhinge if the Fed kept lowering rates.

Pound Stumbles
The sterling dropped by nearly 1.3% against the greenback in the Tuesday session, falling to its lowest level in 6-weeks near 1.9670 and plunged to a fresh all-time low versus the euro at 0.7986. The catalyst for the sell-off was an unexpectedly weak reading in a UK housing report. The March Halifax house prices plunged by 2.5%, its largest monthly decline since 1992, steepening declines from a 0.3% drop a month earlier.

The weaker than expected report on housing reinforced expectations for a 25-basis point rate cut when the BoE announces the results of its policy deliberations on Thursday morning. UK Prime Minister Gordon Brown, in an interview with BBC, touted the Bank of England's ability to cut rates, citing low inflation. He said that was the reason for higher growth forecasts than countries that are equally affected by the credit crunch.

Cable finds support at 1.9640, followed by 1.96 and 1.9550. Additional floors will emerge at 1.9530, backed by 1.95 and 1.9475. On the upside, resistance begins at 1.97, followed by 1.9740 and 1.98. Subsequent ceilings are seen at 1.9830, backed by 1.9860 and 1.99.

Euro Buoyed
The euro continues to maintain its upbeat tone against the majors, steady near its all-time highs against the sterling, and trading above the 1.57-level against the dollar. Supporting the single currency are expectations that the ECB will maintain its hawkish tone when it announces the results of its policy meeting on Thursday. Although the ECB is largely expected to leave rates unchanged at 4.0%, the Bank is seen issuing hawkish commentary focusing on inflation. As a result, the euro will continue to benefit from interest rate differentials over the US and Japan.

EURUSD will encounter resistance at 1.5730, followed by 1.5765 and 1.58. Additional ceilings are seen at 1.5830, backed by 1.5870 and 1.59. On the downside, support is seen at 1.5660, followed by 1.5620 and 1.56. Subsequent floors will emerge at 1.5550 and 1.55.